Shares dive 13% after reorganizing statement

Follows course taken by Comcast's brand-new spin-off business

*

Challenges seen in offering debt-laden linear TV networks

(New throughout, includes details, background, remarks from industry experts and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its decreasing cable television companies such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV organization as more cable television customers cut the cord.

Shares of Warner leapt after the business said the new structure would be more deal friendly and it anticipated to complete the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are thinking about options for fading cable businesses, a longtime cash cow where incomes are deteriorating as countless consumers welcome streaming video.

Comcast last month unveiled strategies to split the majority of its NBCUniversal cable television networks into a brand-new public business. The brand-new company would be well capitalized and positioned to get other cable television networks if the market consolidates, one source told Reuters.

Bank of America research analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service assets are a "very logical partner" for Comcast's new spin-off business.

"We strongly believe there is potential for relatively sizable synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the market term for standard tv.

"Further, our company believe WBD's standalone streaming and studio assets would be an appealing takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable TV organization including TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate department in addition to film studios, consisting of Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media market, as financial investments in streaming services such as Warner Bros Discovery's Max are finally paying off.

"Streaming won as a behavior," stated Jonathan Miller, president of digital media investment business Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming properties from rewarding however shrinking cable TV service, offering a clearer financial investment image and most likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and consultant anticipated Paramount and others may take a comparable path.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before obtaining the even bigger target, AT&T's WarnerMedia, is placing the business for its next chess move, composed MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if additional consolidation will happen-- it is a matter of who is the buyer and who is the seller," wrote Fishman.

Zaslav indicated that circumstance during Warner Bros Discovery's investor call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market debt consolidation.

Zaslav had actually taken part in merger talks with Paramount late last year, though a deal never ever emerged, according to a regulative filing last month.

Others injected a note of caution, keeping in mind Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure change would make it simpler for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television TV service. "However, discovering a purchaser will be challenging. The networks are in debt and have no indications of growth."

In August, Warner Bros Discovery documented the value of its TV possessions by over $9 billion due to uncertainty around costs from cable and satellite suppliers and sports betting rights renewals.

Today, the media company revealed a multi-year offer increasing the overall fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast arrangement, together with a deal reached this year with cable and broadband company Charter, will be a design template for future settlements with suppliers. That could assist stabilize pricing for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles; Editing by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)